Tuesday’s failed attempt to break $55 closed the session with a higher wick and only marginally above the upper Bollinger Band. Yesterday’s close however was a convincing bearish close, comfortably below the upper Bollinger Band to suggest a swing high has formed.

What I will be assessing here is how price declines towards the $48-$50 range and if a second higher low is formed.

If, for a example, we see lots of overlaps on the lower timeframes then I will be more comfortable that we are merely seeing a correction lower before a pending breakout above $55. A more direct route towards $50 though would make me strongly suspect we will remain in a large, sideways range, for longer.

Looking at H4 we can see the decline from $55 has been fairly direct and broken the prior swing low. A Rikshaw Man Doji has formed above WR1, so we may find a bounce could be in the cards where I will then look for a higher low to form. A prime candidate for the bounce to stall is the confluence of resistance around $53 which houses MR1 and WR2.

At this stage I favour an eventual deeper pullback towards $51 and for price to remain in the Bullish Channel.

​If we do not see the bounce higher and instead see direct losses then we may see the Bullish Channel fail to hold, making $48-$50 support zone the likely bearish target. A break below here could eventually target the $44 lows but, for now, I still favour the break above $55 once this bearish correction lower is over.

As mentioned in previous analysis the bias for Oil to eventually break higher is based on the higher futures curve and COTS positioning of large speculators. A weaker USD could also play its hand if we do see the USD Index produce the deeper pullback towards 95.